Documenti di Didattica
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2d 421
Virgin Islands. The principal question presented in this litigation is who are the
present trustees of this trust.
I.
3
The complaint stated that as of May 1, 1978, the National Bank of Detroit held
the sum of $218,900.07 on deposit in the corporate account of Windigo Ranch,
Inc. and $4,955.25 on deposit in the corporate account of FDS Land Company;
these funds were claimed by defendant the Trust Company of the Virgin
Islands, Ltd. as trustee of the Shelden trust; and that the funds also were
claimed by defendant Alger Shelden, Jr. (brother of Francis D. Shelden) and L.
Bennett Young as officers of the two corporations.
The trust instrument1 was filed as an exhibit to the complaint, together with a
list of shares of marketable securities in twenty-four corporations constituting
the corpus of the trust. The securities were valued by Shelden at approximately
two million dollars. In his de bene esse deposition, Shelden testified that he
delivered these securities to Adam Starchild, founder and original owner of the
Virgin Islands Trust Company.2 Included in the corpus of the trust were all the
issued and outstanding stock of defendants FDS Land Company, a Michigan
Corporation, and Windigo Ranch, Inc., a Colorado Corporation. All the
corporate stock of both these corporations were owned by Shelden at the time
of the establishment of the trust.
The Trust Company of the Virgin Islands averred that as Trustee it had
removed Alger Shelden, Jr. and Young as officers of both corporations and had
elected defendant Samuel Glasser of Michigan as president and treasurer and
defendant Ronald J. Zadora as secretary of the two corporations. Glasser
claimed to be the sole designated beneficiary of both bank accounts.
Alger Shelden, Jr. and L. Bennett Young averred that The Trust Company of
the Virgin Islands, Ltd. had been replaced as trustee of the Shelden trust before
its purported action attempting to remove them as corporate officers.
L. Bennett Young and the Detroit Bank and Trust Company were permitted by
the district court to intervene as defendants in the interpleader action in their
capacities as second successor co-trustees of the Shelden trust.
10
In its interpleader complaint, National Bank of Detroit tendered all funds in the
two bank accounts for deposit with the clerk of the district court and prayed
that the defendants be required to answer and settle their respective claims to
the bank accounts on deposit by the two corporations. The district court
authorized the clerk to receive these funds.
11
An answer to the complaint was filed by L. Bennett Young and the Detroit
Bank and Trust Company, asserting that they are the second successor trustees
of the trust; and that as successor trustees they are entitled to both bank
accounts. The answer of The Trust Company of the Virgin Islands, Ltd.
claimed that it is the trustee of the trust and is entitled to the funds in both bank
accounts. Appellant Peter J. Cipollini filed an answer asserting that he is the
duly elected president and treasurer of both Windigo Ranch, Inc. and FDS Land
Company and the duly authorized signatory of both corporations and prayed
that all the funds of the two corporations be transferred to him.
II.
12
13
District Judge Charles W. Joiner on August 20, 1982 granted the motion for
summary judgment, finding that L. Bennett Young and the Detroit Bank and
Trust Company are lawful and proper second successor trustees of the Francis
D. Shelden Revocable Inter Vivos Trust; that the second successor trustees are
the rightful owners of all the outstanding shares of stock of FDS Land
Company and Windigo Ranch, Inc.; and that the two second successor trustees
are entitled to the funds on deposit with the Clerk of the Court on behalf of
Windigo Ranch, Inc. and FDS Land Company. The findings of fact and
conclusions of law of Judge Joiner are made Appendix No. 2 to this opinion.
On August 23, 1982, Judge Joiner entered a judgment that the Clerk of the
Court pay to L. Bennett Young and Detroit Bank and Trust Company on behalf
of FDS Land Company and Windigo Ranch, Inc., the funds on deposit, together
with all accrued interest.
14
On August 24, 1982, Judge Joiner received a mailgram from Adam Starchild,
Box 1608 Tarpon Springs, Florida, attacking L. Bennett Young and charging
that "he will resort to any method to illegally obtain the funds to which he
knows he has no entitlement, and no money should be handed over to him."
Judge Joiner ordered the parties to respond to this mailgram. After considering
the responses and the deposition of L. Bennett Young, taken on August 19,
1982, in other litigation3 between the parties in the United States District Court
of Puerto Rico, Judge Joiner on October 4, 1982 denied the motion for
rehearing filed by the Trust Company of the Virgin Islands.
15
The Trust Company of the Virgin Islands, Ltd. and Peter J. Cipollini appeal.
We affirm.
III.
16
17
The court of appeals is mandated to apply the same test in passing upon an
award of summary judgment as that utilized by the trial court to grant the
motion. Howard v. Russell Stover Candies, Inc., 649 F.2d 620 (8th Cir.1981).
Accordingly the conclusions of the trial court are not protected by the "clearly
erroneous" rule, Luckett v. Bethlehem Steel Corp., 618 F.2d 1373 (10th
Cir.1980), but rather the appellate tribunal, viewing the evidence in the light
most favorable to the party opposing judgment, must determine if a genuine
issue of material fact exists. Smith v. Hudson, 600 F.2d 60 (6th Cir.1979), cert.
denied, 444 U.S. 986, 100 S.Ct. 495, 62 L.Ed.2d 415 (1979). See also Security
National Bank v. Belleville Livestock Commission Co., 619 F.2d 840 (6th
Cir.1980).
18
Accord: New Jersey Life Insurance Co. v. Getz, 622 F.2d 198, 200 (6th
Cir.1980).
In applying this standard, we look to the record to determine whether there are
19
In applying this standard, we look to the record to determine whether there are
any genuine issues of material fact.
IV.
20
21
22
In the course of the discovery proceeding, Appellees filed a motion for leave to
take the deposition of Francis D. Shelden de bene esse pursuant to Federal Rule
of Civil Procedure 32. Over the objection of Appellants, on November 24, 1981
Judge Joiner ordered that the deposition be taken de bene esse in the
Netherlands at a date and time to be arranged between counsel for the parties.
Full opportunity to be present for the deposition was accorded by the district
court to counsel for Appellants, but they did not participate.4
23
The de bene esse deposition was taken on March 31, 1982, at the time and
place scheduled, but counsel for Appellants did not make an appearance.
Counsel for Appellees waited one hour for opposing counsel to appear, then
proceeded with the deposition at 10 a.m. Counsel for Appellants in a letter to
counsel for Appellees offered the explanation that Starchild had been out of jail
only two weeks and his Parole Board refused to permit him to travel. The
record contains no explanation as to why counsel for Appellants could not have
interviewed Starchild in jail or immediately after his release from incarceration.
24
On June 18, 1982 counsel for Appellants filed a motion to suppress the Shelden
deposition because he had not signed it. Judge Joiner ordered that the
deposition be submitted to Francis D. Shelden for reading and signing in
accordance with Federal Rule of Civil Procedure 30. In all other respects
Appellants' motion to suppress the deposition, or for an evidentiary hearing,
was denied by the district court.
25
On July 9, 1982 Francis D. Shelden signed and swore to the deposition, with
the following attestation:IN WITNESS WHEREOF, I have hereunto set my
hand and affixed my notarial seal at Detroit, County of Wayne, State of
Michigan, this 15th day of April, 1982 A.D.
I, Francis D. Shelden, who, being first duly sworn, does depose and say that on
this 9 day of July, 1982, he has read the foregoing deposition transcript in its
entirety and that the transcript is a full, complete and accurate record of his
testimony during said deposition.
37
38
The events leading to the involvement of Shelden with Adam Starchild and the
creation of the revocable inter vivos trust were described by Shelden as follows:
39
In July 1976 Shelden received a telephone call from Deyer Grossman who said
that a mutual acquaintance by the name of Gerald Richards was having severe
"difficulties" and that Richards might involve Shelden in these "difficulties";
and that Shelden might become the subject of blackmail by Richards. Shelden
testified that Grossman "suggested that it might be wise for me to leave the
country for awhile ... to await events." Shelden said that his immediate concern
was protecting his assets, especially his negotiable stocks. He asked Grossman
for advice. Grossman suggested that Shelden contact Adam Starchild, an
investment counseler specializing in offshore investments. Shelden had never
met Starchild but telephoned him in New Jersey and asked for his advice.
Starchild recommended that Shelden bring his stock certificates to New Jersey
and discuss the matter with him further.
40
Shelden removed the securities from his bank safety deposit box and took them
with him to New Jersey. Starchild convinced him of his alleged expertise in
42
43
on his known securities and a copy of Standard & Poors and found Starchild's
figures to be grossly in error. He demanded an accounting. He testified that "I
became increasingly concerned. After the beginning of the year I wanted the
books closed and I needed a final accounting for tax purposes." He testified that
he "kept pestering" Starchild for an accounting of dividends received in 1977;
that Starchild kept telling him " 'Oh, the accountants are working on it' " and
"that sort of thing. 'They will have the final figures next Thursday.' " Shelden
testified that Starchild "went on for several months and I became increasingly
concerned as April 15 drew nearer" .... "I never received anything in written
form ... [that] [h]e talked vaguely about having other accounts." Finally, after
consulting with a Dutch tax lawyer, Antoon Kasdorp, Shelden decided that the
time had come for him to remove The Trust Company of the Virgin Islands as
Trustee and appoint a successor trustee. He advised Starchild of this decision
by telephone. On April 13, 1978, Shelden executed a document removing The
Trust Company of the Virgin Islands as trustee and naming Edward
Brongersma as successor trustee. This document was notarized in Amsterdam
and complies in all respects with the provisions of the Trust Instrument.5 5]
Brongersma accepted the appointment the same day.6
44
Shelden testified that Brongersma for many years had been "a Senator, a Dutch
equivalent. He was a member of the Upper House of the Dutch Government;
was chairman of the Judicial committee; was a lawyer, doctor of law."In his
deposition, Antoon Kasdorp stated that he served the papers removing The
Trust Company of the Virgin Islands upon Starchild in person April 20, 1978.7
45
Shelden testified that the removal of The Trust Company of the Virgin Islands,
Ltd. as trustee was his own decision and his "free and voluntary act."
46
47
Shelden testified that the appointment of Young and the Detroit Bank and Trust
Company as second successor trustees was done with his approval and consent.
He ratified the appointment in writing.9
48
Brongersma also executed the affidavit quoted in the note. 11 The signature and
seal of the Notary were duly verified.
50
51
A. Yes. The understanding was that upon his removal, he would do two things:
He would provide a final accounting, of course, and he would render the assets
to a representative for the successor trustee.
52
Q. Well, what did Mr. Starchild do after he was served with the removal
papers?
53
A. He did nothing.
54
Q. When you say he did nothing, did he turn any assets over to Mr.
Brongersma?
55
A. No.
56
57
A. No.
58
59
A. No.
60
Q. Anything to you?
61
A. No.
62
63
A. No.
Q. Did there come a time when Mr. Young got more in the foreground?
64
Q. Did there come a time when Mr. Young got more in the foreground?
65
66
Q. All right.
67
68
69
Q. All right, and did Mr. Young, at some point, indicate something to you
about this situation?
70
A. Yes. Well, he exercised his power as Protector of the trust, later, to have
Edward Brongersma removed and appointed himself and the Detroit Bank &
Trust Company as trustees.
71
Q. All right.
72
73
74
75
76
Q. All right.
77
Let me show you, Mr. Shelden, what's been marked as your Deposition Exhibit
No. 5, and ask you if you can identify that for us, please?
78
79
Q. All right.
80
Did you receive a copy of this document shortly after the date it appears, which
is October 16, 1979?
81
A. Yes.
82
Q. All right, and was this in accordance with your understanding of what Mr.
Young was going to do?
83
A. Yes.
84
Q. All right.
85
Now Mr. Shelden, let me show you what's been marked as Shelden Deposition
Exhibit No. 6, and see if you can identify that for us, please?
86
87
88
A. Yes, it is.
89
90
A. Yes, certainly.
91
92
A. Yes.
93
Q. All right.
94
I'd like to show you Shelden Deposition Exhibit No. 7, and see if you can
identify that for me, please?A. Yes. This is the Acknowledgment of Removal
of Successor Trustee in which Edward Brongersma acknowledged that he was
being removed as successor trustee.
95
Q. All right, and did Mr. Brongersma sign this in your presence?
96
A. Yes, he did.
97
Q. Okay.
98
99
A. No, no.
112 A. Excuse me, I'm sorry, it was the National Bank of Detroit.
113 Q. And do you recall how you were informed of this?
114 A. I don't recall, specifically, right now. It was some--it was, perhaps--it was
from Bennett Young, but I'm not absolutely certain.
115 Q. Can you recall whoever told you, what in essence the conversation was?
116 A. Yes. Two representatives--two people had presented themselves at the
National Bank of Detroit demanding where the assets--from my incorporations
were.
117 Q. Now, this is the perfect time, I think, to ask you something about this.
118 Do you recall what corporate assets were at the National Bank of Detroit, at this
time?
119 A. There was cash from two corporations.
120 Q. All right.
121 Do you recall the name of the corporations?
122 A. Yes; the Windigo Ranch Corporation and the FDS Corporation.
123 Q. Let's back in a bit in time. Do you recall when FDS and Windigo were
formed?
124 A. Yes; they were formed at or very shortly after our meeting in Antigua, in
October of 1976.
125 Q. Okay.
126 Do you recall who formed those two corporations?
127 A. Yes. I-Q. Who did the legal work, I should say?
128
145
161 Q. Okay.
162 Today, March 31, 1982, who do you consider to be the valid trustees of your
trust, Mr. Shelden?
163 A. The valid trustees of my trust are L. Bennett Young and the Detroit Bank &
Trust Company.
164 Q. And who do you claim are the proper owners of stock in FDS Land and
Windigo Ranch Corporation?
165 A. L. Bennett Young and the Detroit Bank & Trust Company.
166 Q. And who would be entitled to the funds in the bank account and forms the
base of this action, Mr. Young?
167 A. L. Bennett Young and the Detroit Bank & Trust Company.
168 Q. Are you aware, Mr. Shelden, of your fugitive status in the United States?
169 A. Yes.
170 Q. Are you aware of the fact what Mr. Young and Detroit & Trust Company's
position is with regard to transferring assets to you?
171 A. Yes; they absolutely cannot do that.
172 Q. And you recognize that?
173 A. Yes.
174 Q. You recognize you'll not receive assets from Detroit Bank & Trust Company
and Mr. Bennett as long as you're a fugitive?
175 A. Yes, I recognize that.
176 Q. And you still wish them to be your trustees?
to permit summary judgment. The Trust Company of the Virgin Islands, Ltd.
places strong reliance on an unauthenticated document entitled "ADDENDUM
TO FRANCIS D. SHELDEN INTER VIVOS TRUST" bearing the date of
April 24, 1978. This allegedly was written eleven days after Shelden had
removed The Trust Company of the Virgin Islands, Ltd. as trustee and Edward
Brongersma had accepted appointment as first successor trustee in full
compliance with the trust instrument as detailed above. The "Addendum" is
dated four days after Antoon Kasdorp, according to his affidavit, personally
served Starchild with the removal papers on April 20, 1978. The "Addendum"
purported to "nominate, constitute and appoint the Trust Company of the Virgin
Islands" as trustee of the "Trusts, hereinabove created" (emphasis supplied),
without bond or "if a bond is required by law it be nominal in amount." The
"Addendum" provided that the British Virgin Islands would be the "situs of the
trust" and that "This Trust shall be governed by and construed in accordance
with the laws of the British Virgin Islands." It bears purported signatures
(which are virtually illegible) over the typed name of "Francis D. Shelden,
Settlor" and Adam Starchild for the Trust Company of the Virgin Islands. It is
not witnessed, notarized or otherwise authenticated. The date, April 24, 1978, is
typed and not authenticated. It could have been inserted at any time. Judge
Joiner correctly concluded that the discovery evidence relied upon by
Appellants was not sufficient to create any genuine issue of material fact as to
the removal of the Trust Company of the Virgin Islands as trustee on April 13,
1978, as testified by Shelden and established by verified documents in the
record.
187 Appellants further contend that the evidence raises serious questions of fact as
to whether the Settlor established the trust for an illegal purpose. This is
irrelevant to the resolution of the issues raised by the interpleader complaint.
The question of the purpose of the trust is not before the Court in this case. We
reemphasize that the only genuine issue of material fact presented by the
complaint is who are the present trustees of the trust. Even if it be concluded
that the trust was established for an illegal purpose, that would not make the
Trust Company of the Virgin Islands the present trustee.
188 Appellants further contend that, because of the illegality of the trust, the Trust
Company of the Virgin Islands is entitled to retain all the assets originally
transferred to the trustee. This contention likewise is unsupported by the record
and is irrelevant to the resolution of the issues raised by the interpleader
complaint.
189 We note that there is nothing in the language of the trust instrument that raises
the slightest suspicion of illegality. Furthermore, with respect to Appellants'
contention that the trust was created for an illegal purpose, we note that the
idea of creating the trust did not originate with Shelden. It was created upon the
recommendation and urging of Starchild, who organized the Trust Company of
the Virgin Islands for the purpose of administering it.
190 In another effort to establish the existence of a genuine issue of material fact,
Appellants assert that L. Bennett Young, who in his capacity as protector of the
trust, removed Brongersma as first successor trustee and appointed himself and
the Detroit Bank and Trust Company as second successor trustees, executed a
resignation as protector of the trust in 1977 or 1978. This assertion is based
upon a deposition given by Young in the case of Shelden v. Trust Company of
the Virgin Islands, Ltd., in which the opinion of the district court of Puerto Rico
is published in 535 F.Supp. 667 (D. Puerto Rico 1982).12
191 Appellants' contention that Young resigned as protector of the trust is
contradicted by Young's deposition. Young testified that Shelden suggested
that he, Young, write letters to newspaper editors, hold a press conference or
appear on television to correct untrue news stories then being published about
Shelden. Young said that his own judgment was to do nothing about the
newspaper articles because to respond to them might cause more articles and
more publicity. Therefore, Young declined to engage in a publicity campaign
on behalf of his client and tendered his resignation as Shelden's attorney if
Shelden desired to accept it. Young testified that Shelden refused to accept his
resignation and destroyed Young's letter. That no resignation of Young ever
occurred, whether as attorney for Shelden, protector of the trust or second
successor trustee of the trust, is made clear by Shelden's deposition as well as
the deposition of Young when read in its entirety.
192 Furthermore, the District Court of Puerto Rico, in the case in which Young's
deposition was taken, did not hold that Young had resigned as protector of the
trust. In Shelden v. Trust Company of the Virgin Islands, Ltd., supra, 535
F.Supp. 667,13 District Judge Cerezo authorized Young and the Detroit Bank
and Trust Company to be added as plaintiffs in that action in their role as
successor trustees of the trust.
193 District Judge Cerezo made the following finding as to the role of L. Bennett
Young under the provisions of the Shelden Trust:
194 When the trust was created, Shelden vested Young with all powers belonging to
him, including the power of removal of the trustee and designation of successor
trustees, prohibiting him only from revoking or modifying the trust. The Trust
evidence is not disputed as to any material fact, the case should be decided as a
matter of law rather than submitted to a jury. Id. (emphasis supplied). Here, the
purported issues of fact asserted by the Appellants were not material to the
disposition of the ultimate issue, namely who were the proper trustees to the
Shelden trust, and thus entitled to the monies paid over by the National Bank of
Detroit to the Clerk of the District Court for the Eastern District of Michigan.
Therefore, we hold that Judge Joiner did not err in granting summary judgment
in favor of the second successor co-trustees, L. Bennett Young and the Detroit
Bank and Trust Company.
VI.
200 The summary judgment granted by Judge Joiner in the present case is
supported by the decision of the District Court of Puerto Rico in Francis D.
Shelden, as Settlor of the Francis D. Shelden Revocable Inter-vivos Trust, and
L. Bennett Young, Esq., as Protector of the Trust, v. The Trust Company of the
Virgin Islands, Ltd., and Adam Starchild, Individually and as Director and
Trustee, supra, 535 F.Supp. 667 (D. Puerto Rico 1982). The action was filed by
Shelden and L. Bennett Young, the latter in his capacity as protector of the
Shelden Trust. Defendant Starchild was served with process in Puerto Rico on
August 9, 1978. Shelden and Young sought relief against The Trust Company
of the Virgin Islands, Ltd. and Starchild for breach of trust, alleging that the
trustee failed to perform the trust duties. Plaintiffs sought an accounting in
accordance with the provisions of the trust instrument, full disclosure of
defendants' financial activities, removal of the acting trustee and a transfer of
the corpus of the trust to a successor trustee "so that the same can be preserved
and administered within the jurisdiction and under the laws of the United
States." 535 F.Supp. at 668.
201 Thereafter L. Bennett Young and the Detroit Bank and Trust Company filed a
motion to be added as plaintiffs in their capacities as successor trustees of the
Shelden trust.
202 The district court held that Shelden could not maintain the action because he
was not domiciled in Michigan at the time the complaint was filed, and had no
intention of ever reestablishing a Michigan domicile, and was no longer a
citizen of the United States; and that an action could not be maintained between
a noncitizen plaintiff and a noncitizen defendant.
203 District Judge Cerezo concluded, however, that Shelden is not an indispensable
party; and that Young, as protector of the trust, and Young and the Detroit
Bank and Trust Company as successor trustees, can maintain the action against
the former trustee and Starchild. Young and the bank were admitted as
plaintiffs in their role as successor trustees.
204 With respect to its jurisdiction, the district court pointed out that "during the
years 1977-78 Starchild may have conducted the bulk of the Trust Company's
affairs from Puerto Rico and, as its agent, availed himself of the privilege of
conducting business within the forum state;" and that "Starchild wrote Shelden
twenty-six letters and aerograms from San Juan and was sent twenty-seven
letters by Shelden to his San Juan address and that he [Starchild] sent Shelden
cables from San Juan and phoned him several times from here." 535 F.Supp. at
669.
205 The following quotation from the opinion of District Judge Cerezo is especially
pertinent to the present litigation:
206 Furthermore, and perhaps more important, is the fact that the trust instrument
gave Shelden, as sole beneficiary, and Young, as protector, the right to remove
the trustee and to designate his successor. There was no provision requiring
them to seek approval of the court in the event of removal of the trustee. In the
exercise of the powers vested in them by the trust itself, the acting trustee was
removed and a successor trustee designated. Subsequently, and again in the
exercise of their powers, that successor trustee was removed and other
successor trustees appointed, namely, L. Bennett Young who originally filed
suit as co-plaintiff of protector and The Detroit Bank and Trust Company.
Defendants have not shown any legal impediment to the exercise of that power
by the settlor-beneficiary and/or the protector. There is no reason to believe that
the removal of the defendant trustee and the subsequent designation of the
successor trustees is not a legitimate exercise of those powers. This action is
essentially a proceeding seeking an accounting of the defendant trustee and
successor trustees can bring accounting proceedings against the original trustee
who has allegedly committed wrongdoing in the administration of the trust.
207 Successor trustees having been designated and having requested the Court to
allow them to appear as plaintiffs, we must now determine if the action can be
prosecuted by them in the absence of Mr. Shelden who has been found to be a
party not domiciled in the State of Michigan but in Europe and whose presence
destroys diversity jurisdiction. Since the trust deed invests the protector with
full authority to exercise the rights reserved to the settlor-beneficiary since its
creation and since the successor trustees have been designated in accordance
with the provisions of the trust instrument, they are empowered as such
successor trustees to continue this action. Shelden's presence in the litigation is
neither necessary nor indispensable for the trustees can demand an accounting
from the original trustee and can sue to protect and preserve the trust capital.
Neither Young, as protector, nor the successor trustees are straw parties to this
action. Both the protector and the successor trustees are available to testify and
to be deposed and there is complete diversity between them and defendants.
Were we to conclude that the successor trustees and/or the protector cannot
initiate this action despite their capacity to do so and their interest in the trust,
we would in effect be holding that because the settlor of a trust is a fugitive the
successor trustees cannot have access to the courts to hold liable the
wrongdoing trustee. Even if the settlor were convicted, the successor trustees
could institute accounting proceedings against the original trustee. Although
Shelden's fleeing the jurisdiction to avoid prosecution is an illegal and an
offensive action, the Court having previously exercised in personam and
subject matter jurisdiction, cannot now close the door to the protector or to the
successor trustees of the trust to seek an accounting for alleged acts of
mismanagement and breach of trust by the predecessor trustee.
208 Having concluded that Shelden is not an indispensable party and that the
successor trustees have a legitimate and real interest in the trust, the Court
cannot dismiss this action.
535 F.Supp. at 672.
209
VII.
210 The contentions of Appellant, The Trust Company of the Virgin Islands, Ltd.,
are without merit for the reasons stated above. The contentions of Appellant
Peter J. Cipollini are without merit because he no longer is an officer of FDS
Land Company or Windigo Ranch, Inc. The stock in both corporations is
owned by L. Bennett Young and Detroit Bank and Trust Company, successor
trustees of the Shelden Trust.
211 The summary judgment of the district court is affirmed. The costs of these
appeals are taxed against Appellants.
APPENDIX No. 1
FRANCIS D. SHELDEN REVOCABLE INTER VIVOS TRUST
212 THIS TRUST is executed this 28th day of September, 1976, by and between
FRANCIS D. SHELDEN, hereinafter referred to as the Settlor, and THE
TRUST COMPANY OF THE VIRGIN ISLANDS, LTD., hereinafter referred
to as the Trustee.
their choice. Such Successor Trustee shall possess and exercise all powers and
authority herein conferred on the original Trustee.
232 4.6. Acts of Prior Trustee. No Successor Trustee hereunder shall be held liable
or responsible in any way for the acts or omissions of a predecessor Trustee, but
shall be liable only for his own acts or omissions with respect to property
received or distributed by him as Trustee.
233 4.7. Trustee Accountability. Settlor, any income beneficiary or person with a
remainder interest, whether vested or contingent, shall have access to the books
and records of any Trustee, other than Settlor, during normal business hours.
Trustee shall account at least annually for all receipts and disbursements to all
income beneficiaries.
234 4.8. Trustee Compensation. The Trustee shall be entitled to receive fair and just
compensation for its services hereunder and shall be reimbursed for all
reasonable expenses incurred in the management and conservation of the Trust
estate. The Trustee is also authorized to employ agents, legal counsel,
accountants or brokers and to pay them fees and expenses as it may be
necessary or advisable to carry out the provisions of this Trust.
ARTICLE V
POWERS RETAINED BY SETTLOR
235 5.1 Settlor or any other person may at any time add any property to this trust,
transferring by Will or otherwise. Settlor reserves the right to amend, modify or
revoke this Trust Agreement, in whole or in part and at any time or times, by
notice in writing to Trustee, and such amendment, modification or revocation
shall be effective immediately upon delivery of such notice to Trustee, except
that changes with respect to Trustee's duties, liabilities or compensation shall
not be effective without its consent. Upon Settlor's death, this trust shall
become irrevocable.
236 (ARTICLE VI contains standard Spendthrift and Rule Against Perpetuities
provisions.)IN WITNESS WHEREOF, this instrument has been executed the
day and year first above written.
/s/ FRANCIS D. SHELDEN, Settlor
237
THE TRUST COMPANY OF THE
1620 shares
15800 shares
2230 shares
200 shares
2510 shares
236
2080
100
800
400
1000
10014
3520
2654
1830
shares
shares
shares
shares
shares
shares
shares
shares
shares
shares
1118 shares
200 shares
1636 shares
450 shares
-----------40000 shares
1000 shares
1000 shares
------------
270 8. That on April 20, 1978, Adam Starchild, on behalf of The Trust Company of
the Virgin Islands, Ltd., was personally served with removal papers in New
York City.
271 9. That on October 16, 1979, L. Bennett Young, as protector of the trust,
appointed himself and Detroit Bank and Trust Company as Successor CoTrustees under the terms of the trust agreement and removed Edward
Brongersma as successor trustee.
272 10. That on March 31, 1982, the Settlor, pursuant to a de bene esse deposition
taken pursuant to Court order, reaffirmed that his lawful and proper trustees are
L. Bennett Young and Detroit Bank and Trust Company, and that they have
been so since October 16, 1979.
CONCLUSIONS OF LAW
273 1. That the lawful and proper trustees of the Francis D. Shelden Revocable
Inter Vivos Trust are L. Bennett Young and Detroit Bank and Trust Company
as Second Successor Co-Trustees.
274 2. That L. Bennett Young and Detroit Bank and Trust Company, as the lawful
and proper trustees, are the rightful owners of all of the outstanding shares of
stock of FDS Land Company and Windigo Ranch, Inc.
275 3. That L. Bennett Young and Detroit Bank and Trust Company, as the lawful
and proper trustees, are entitled to the funds in question on deposit with the
Clerk of Court on behalf of Windigo Ranch, Inc. and FDS Land Company.
/s/ CHARLES W. JOINER
276
UNITED STATES DISTRICT
COURT JUDGE
277 KRUPANSKY, Circuit Judge, dissenting.
278 Because the majority and the district court have fundamentally erred in
identifying the fact at issue herein, I must respectfully dissent. Contrary to the
majority opinion that "the issue of fact in this interpleader action is who are the
present trustees of the Shelden trust," supra at 433, the actual dispute in this
case concerns the identity of the corporate officers of FDS Land Co. and
Windigo Ranch Inc. who may properly withdraw the funds held in the
corporate accounts of these organizations maintained at the National Bank of
Detroit (NBD). Simply put, a determination of the individual or individuals
authorized to act as the personal representative of a corporate shareholder does
not resolve the issue of the identity of the duly designated corporate officer or
agent authorized to control corporate assets.
279 Viewed properly, only the following facts are relevant. Young and Alger
Shelden, Jr. were indisputably the corporate officers of FDS Land Co. and
Windigo Ranch Inc. listed on the signature cards (withdrawal authorization) at
NBD at the time the Trust was formed. Presumably, those corporate officers
could have been removed, or additional officers with authority over corporate
accounts could have been designated only by fulfilling both of two conditions:
(a) possessing the authority to vote the corporate shares, and (b) actually taking
formal corporate action in conformity with the laws of the incorporating state
and the corporate by-laws. The Trust created by Shelden empowered the
Trustee to "vote stocks held in trust." Sec. 3.2.
280 Accordingly, the first relevant inquiry is the validity of the Trust, which,
incidently, has not been addressed. If a valid Trust existed at the time here in
issue, then any lawful Trustee would have the authority to elect corporate
officers of FDS Land and Windigo Ranch, although two separate factual
inquiries would still remain, namely (a) was the authority ever exercised, and
(b) was the exercise of the authority in conformity with the law and corporate
by-laws governing the operation of the two companies. If the Trust is not valid,
perhaps because it was created for the improper purpose of underwriting a
flight from prosecution, then the party in direct control of the stock was and is
Shelden himself, and the secondary inquiries must resolve the presence of any
evidence that he properly exercised the authority to elect the corporate officers
of FDS Land or Windigo Ranch and if that exercise of authority was lawful.
281 The district court merely determined the identity of the proper Trustee under
the Trust. Even if Shelden's de bene esse testimony is unassailable support for
that finding, the conclusion below is simply the right answer to the wrong
question. The court did not address the facts in dispute concerning the validity
of the Trust so as to determine if the authority to vote the shares now inheres in
any Trustee or remains with Shelden. Nor did the trial court find any facts
establishing the manner in which the party in control of the stock may have
utilized that authority to elect corporate officers authorized to withdraw
corporate assets from corporate accounts.
282 Thus, in sum, the district court does not appear to have scrupulously hewn to
Pertinent parts of the trust instrument are made Appendix No. 1 to this opinion
The record indicates that The Trust Company of the Virgin Islands, Ltd. was
established by Starchild for the purpose of administering the Shelden trust. In
his de bene esse deposition Shelden testified that "The Trust Company of the
Virgin Islands was Adam Starchild's alter ego."
This deposition of Young was taken in the case of Shelden v. The Trust
Company of the Virgin Islands, Ltd., in which the opinion of the District Court
of Puerto Rico is published in 535 F.Supp. 667 (D. Puerto Rico 1982). That
decision is discussed in Part VI of this opinion
When the attorneys did not agree upon a date, Judge Joiner issued an order
directing that the deposition be taken in the City of Amsterdam in the
Netherlands during the week of January 25, 1982. The attorneys for Appellees
gave written notice on December 17, 1981 to counsel for Appellants that the
deposition would be taken at the offices of L.J.W.M. Schroeder, at J.W.
Brouwerg's Plein 10, Amsterdam, Netherlands on Wednesday, January 27,
1982 at 9 a.m
Counsel for Appellants gave notice of a hearing before Judge Joiner on January
12, 1982 on their motion to adjourn the de bene esse deposition. The reason
given for adjournment was the averment of the attorneys for Appellants that
they needed the assistance of Adam Starchild, founder of the Trust Company of
the Virgin Islands, Ltd., in preparing for the deposition of Francis D. Shelden;
and Starchild was incarcerated in the Passaic County Jail in New Jersey; that
Starchild's Parole Board had fixed a date for his release from jail within the
next three months, and counsel believed that Starchild would be released before
March 1, 1982. An adjournment of the Shelden deposition was requested until
after March 25, 1982.
Judge Joiner entered an order directing that Shelden's de bene esse deposition
be adjourned from January 27, 1982, and that it be taken and completed before
April 1, 1982. On March 5, 1982, Counsel for Appellees gave written notice to
counsel for Appellants that the Shelden deposition would be taken on
Wednesday, March 31, 1982 at 9 a.m. at the office of L.J.W.M. Schroeder in
Amsterdam at the address indicated in their previous notice.
The document removing The Trust Company of the Virgin Islands, Ltd. and
appointing Brongersma as first successor trustee is as follows:
REMOVAL OF A TRUSTEE AND APPOINTMENT OF A SUCCESSOR
TRUSTEE
/s/
(Seal)
Kingdom of the
Netherlands
Province of North
Holland
City of Amsterdam
Consulate General of
the
United States of
America
FRANCIS D. SHELDEN
Seen by me, Mr. Leo Johannes Willem Marie Schroe
notaris, having his office in Amsterdam, for
for legalisation of the signature hereabove of
Mr. Francis D. Shelden.
Amsterdam, April 13th, 1978.
Signed by L. J. W. M. Schroeder
BRITISH CONSULATE GENERAL AMSTERDAM
Date 13 April, 1978
for the legailisation of the signature and
seal (overleaf) of Mr. L. J. W. M. Schroeder, a
Notary Public of Amsterdam, the Netherlands.
(Signature not legible)
British Vice-Counsul
)
)
)
)
SS
ACCEPTANCE OF APPOINTMENT
OF SUCCESSOR TRUSTEE
I, EDWARD BRONGERSMA, of Tetterodeweg 1, Overveen, the Netherlands,
hereby accept my appointment as Successor Trustee of the Francis D. Shelden
Revocable Inter Vivos Trust, and hereby accept to possess and exercise all
powers and authority conferred on the original Trustee by the said Trust
instrument dated September 28, 1976 and conferred on me by the instrument
dated 13 April 1978 to appoint me as Successor Trustee.
)
)
)
)
)
EDWARD BRONGERSMA
Date 13 April 1978
For the legailsation of the signature and
seal (overleaf) of L. J. W. M. Schroeder,
a Notary Public of Amsterdam, the
Netherlands
(Signature not legible)
British Vice-Counsul
SS
That if called upon to do so, I could testify to the matters stated in this affidavit
since they are made from my personal knowledge
That I went to the United States and personally served Adam Starchild with the
Removal of Trustee and Appointment of Successor Trustee dated 13 April 1978
and Acceptance of Appointment of Successor Trustee dated 13 April 1978 on
20 April 1978 in the city of New York, N.Y
Antoon Kasdorp
Amsterdam,
The undersigned,
Meester Leo Johannes Willem Marie Schroeder, notaris with office in
Amsterdam,
declares that the signature on the reverse side is the signature of Meester
Antoon Kasdorp, a lawyer in Amsterdam, who has solemnly affirmed before
me, notaris, that his statement is the truth, the whole truth and nothing but the
truth.
SETTLOR'S ACKNOWLEDGEMENT OF
REMOVAL OF TRUSTEE AND
APPOINTMENT OF SUCCESSOR TRUSTEES
I hereby acknowledge and affirm the removal of EDWARD BRONGERSMA
as Successor Trustee of my Revocable Inter-Vivos Trust dated September 28,
1976, by the action of L. BENNETT YOUNG, Protector of my said Trust, by
written instrument dated October 16, 1979, and I further accept and affirm the
appointment by the said Protector of my said Trust of L. BENNETT YOUNG
and THE DETROIT BANK & TRUST COMPANY, as Successor Trustees
with all powers and authority granted to them by the said written instrument
dated October 16, 1979, and under the provisions of my said Trust.
/s/ FRANCIS D. SHELDEN
Dated: 13 November, 1979.
Witnesses:
/s/ (signature not legible)
/s/ (signature not legible)
Seen by me, Meester Leo Johannes Willem Marie Schroeder, notaris with
office in Amsterdam for legalisation of the signatures hereabove of Mr. Francis
Duffield Shelden, Mr. Hendricus Marinus van der Schroeff and Miss.
Petronella Hendrica Cornelia Maria Perguin, all of them are known to me.
Amsterdam, 16th November 1979.
(signature)
(seal)
10
ACKNOWLEDGEMENT OF
REMOVAL OF SUCCESSOR TRUSTEE
I, EDWARD BRONGERSMA, of Tetterodeweg 1, Overveen, The Netherlands,
That at no time have I received any assets or property of any nature whatsoever
belonging to said Trust from the Trust Company of the Virgin Islands, Ltd.
Adam Starchild or any other person connected with said Trust
That at no time have I ever received an accounting from the Trust Company of
the Virgin Islands, Ltd. of its activities as my predecessor Trustee nor have I
ever received such an accounting from Adam Starchild or any other person
connected with said Trust
/s/ EDWARD BRONGERSMA
Amsterdam,
12
13